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The Avoidable War the Decade of Living Dangerously: Navigating the Shoals of U.S.-China Relations

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The Avoidable War the Decade of Living Dangerously: Navigating the Shoals of U.S.-China Relations An Asia Society Policy Institute Publication The Avoidable War The Decade of Living Dangerously: Navigating the Shoals of U.S.-China Relations BY THE HONORABLE KEVIN RUDD President and CEO, Asia Society | President, Asia Society Policy Institute The Avoidable War The Decade of Living Dangerously: Navigating the Shoals of U.S.-China Relations A COLLECTION OF MAJOR SPEECHES AND PUBLICATIONS FROM 2020 THE HONORABLE KEVIN RUDD PRESIDENT AND CEO, ASIA SOCIETY PRESIDENT, ASIA SOCIETY POLICY INSTITUTE FEBRUARY 2021 With a solution-oriented mandate, the Asia Society Policy Institute (ASPI) tackles major policy challenges con- fronting the Asia-Pacific in security, prosperity, sustainability, and the development of common norms and values for the region. The Asia Society Policy Institute is a think- and do-tank designed to bring forth policy ideas that incorporate the best thinking from top experts in Asia and to work with policymakers to integrate these ideas and put them into practice. ABOUT THE AUTHOR The Honorable Kevin Rudd AC served as Australia’s 26th Prime Minister (2007–2010, 2013) and as Foreign Minister (2010–2012). He led Australia’s response during the global financial crisis—the only major developed economy not to go into recession—and co-founded the G20. Mr. Rudd became President of the Asia Society in January 2021, after having joined the Asia Society Policy Institute in New York as its inaugural President in January 2015. He serves as Chair of the Board of the International Peace Institute and Chair of Sanitation and Water for All. He is a Senior Fellow at Harvard University’s John F. Kennedy School of Government, a Distin- guished Fellow at Chatham House in London, a Distinguished Statesman with the Center for Strategic and International Studies in Washington D.C., and a Distinguished Fellow at the Paulson Institute in Chicago. Mr. Rudd is a member of the Comprehensive Nuclear Test-Ban Treaty Organization’s Group of Eminent Persons. He serves on the International Advisory Board of the Schwarzman Scholars program at Tsinghua University, and is an Honorary Professor at Peking University. Mr. Rudd is proficient in Mandarin Chinese. He remains actively engaged in indigenous reconciliation. The Asia Society Policy Institute and the Asia Society take no institutional positions on matters of public policy and other issues addressed in the reports and publications they sponsor. All statements of fact and expressions of opinion contained in this report are the sole responsibility of its authors and may not reflect the views of the organization and its board, staff, and supporters. © 2021 The Asia Society. All rights reserved. The Asia Society Policy Institute Web: AsiaSociety.org/Policy-Institute Twitter: @AsiaPolicy Facebook: facebook.com/AsiaPolicy Email: [email protected] New York Washington, D.C. 725 Park Avenue, 6th Floor 1779 Massachusetts Ave, NW, Suite 805 New York, NY 10021 Washington, DC 20036 +1 212 288 6400 +1 202 833 2742 COVER (LEFT): A member of the U.S. Capitol police wears a mask during a press conference from Republican House leadership about the House response to COVID-19 outside the U.S. Capitol in Washington, DC. SAUL LOEB. AFP. Getty Images. April 22, 2020; COVER (RIGHT): Chinese security officers wear protective masks as they close the gates after the closing session of the National People's Congress at the Great Hall of the People in Beijing, China. Kevin Frayer. Getty Images. May 28, 2020. CONTENTS Foreword 4 Introduction 6 1. COVID-19 Trumps Nationalism 10 2. America, China, and Saving the WHO 13 3. The Coming Post-COVID Anarchy: The Pandemic Bodes Ill for 17 Both American and Chinese Power—and for the Global Order 4. Beware the Guns of August—in Asia 23 5. China Backslides on Economic Reform 32 6. How the G20 Can Overcome COVID-19 35 7. China Has Politics Too: The Impact of Chinese Domestic Politics 38 and Economic Policy on the Future of U.S.-China Relations 8. The New Geopolitics of China’s Climate Leadership 55 9. The Decade of Living Dangerously 63 Appendix: Future Directions for Australia-China Relations 75 4 | ASIA SOCIETY POLICY INSTITUTE THE AVOIDABLE WAR: THE DECADE OF LIVING DANGEROUSLY FOREWORD THE YEAR 2020 WAS UNPRECEDENTED for the United States, China, and the world at large. The COVID-19 pandemic has disrupted life on a scale not seen in generations and has exacted a terrible human toll. The economic, social, and political consequences of the pandemic are still unfolding, even as the arrival of successful vaccines signals the beginning of a recovery. From an economic perspective, the United States was thrown into recession along with virtually every other developed nation, as it voluntarily shut down much of its economy in the first half of the year. At the same time, China emerged as the only major economy to achieve growth in 2020, narrowing the gap between the world’s two largest economies and increasing the need for productive collaboration between them. It was also a year of profound transformation in terms of how the world does business, with remote video calls replacing in-person meetings, accelerated growth of the digital economy, and supply and demand shocks interrupting global supply chains. I’ve had a front-row seat in the financial sector to observe these and many other pandemic-driven developments, and I expect their impact to last for years to come. Finally, this was a year of heightened intensity in the political sphere. In the United States, a heated election resulted in a transfer of power to a new presidential administration. In China, President Xi Jinping navigated the crisis by marshaling the full capabilities of his government. The year 2021 will be an especially consequential one in Beijing, as it marks the centenary of the foundation of the Chinese Communist Party, and will bring major political preparations for the 20th Party Congress in 2022. President Xi describes the present moment as “the world undergoing changes unseen in a century”— he may be right. The foundations of U.S.-China relations have been tested over the past few years, as intense trade negotiations demonstrated how enmeshed our two countries’ economic activity has become. Unfortunately, the pandemic also exacerbated bilateral tensions in other areas to a level unseen since diplomatic normalization more than four decades ago. The events of the past year have demonstrated the critical importance of understanding the forces reshaping U.S.-China relations and the future of the global political and economic order. In today’s world, more than ever before, that means understanding China and its place in Asia and the world. Few people are better positioned to provide that understanding than Kevin Rudd, former prime minister of Australia and president of the Asia Society and its think tank, the Asia Society Policy Institute—as well as a lifelong Sinologist. It has also been my privilege to get to know Kevin over the past decade during his tenure as a member of the Board of Directors for the Schwarzman Scholars program, an international fellowship I founded at Tsinghua University in Beijing to bring together the world’s future leaders to study in China and train to become effective links between China and the rest of the world. Kevin’s insights have been invaluable as we have built the program. The collection of Kevin’s speeches, articles, and interviews comprising this volume presents insight into some of the key developments of 2020 and what they mean for the U.S.-China relationship and ASIA SOCIETY POLICY INSTITUTE THE AVOIDABLE WAR: THE DECADE OF LIVING DANGEROUSLY | 5 the wider world. It includes reflections on the arrival of COVID-19 and its impact on the United States, China, and the world order; the ensuing changes within China and their implications for policymakers, business leaders, and investors alike; escalating tensions between the United States and China as the two countries attempt to navigate Thucydides’ trap; and, finally, how this challenge can be managed as we enter what Kevin calls the “decade of living dangerously.” As a strong proponent of open dialogue between China and the West, I believe this volume provides an invaluable source of clarity as we seek a return to a greater level of strategic stability and renewed global prosperity in the decade ahead. Stephen A. Schwarzman Chairman, CEO, and Co-Founder of Blackstone Founding Trustee of Schwarzman Scholars Trustee of the Asia Society 6 | ASIA SOCIETY POLICY INSTITUTE THE AVOIDABLE WAR: THE DECADE OF LIVING DANGEROUSLY INTRODUCTION THE YEAR 2020 WAS A DEVASTATING ONE, A YEAR OF PLAGUE, TURMOIL, AND LOSS. It was also a year of great change and transformation, as the world adapted with difficulty to meet challenges largely unprecedented in living memory, and the trends of global power appeared to shift beneath our feet. Whether from fear or dark humor, it has even been described as the year of the apocalypse. This may be more accurate than most consider: the word apocalypse, after all, means “revelation,” stemming from a Greek word literally meaning to pull the lid off something, uncovering what lies beneath. The year 2020 was like this in more ways than one. It pulled the lid off the true extent and meaning of our globalized, interconnected world; it revealed the dysfunction present in our institutions of national and international governance; and it unmasked the real level of structural resentment, rivalry, and risk present in the world’s most critical great power relationship—that between the United States and China. The year 2020 may well go down in history as a great global inflection point. For that reason alone, it’s worth looking back to examine what happened and why, and to reflect on where we may be headed in the decade ahead—in what I describe as the “Decade of Living Dangerously.” The purpose of this third volume of the annual “Avoidable War” series is to do precisely that.
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